Mr. Speaker, our debate on this motion must take two different angles into account. This is an example of a terrible decision made by the federal government, which, systematically, year after year, sends conflicting messages to the business community and investors.

For example, in September 2005, the Liberal finance minister declared a moratorium on the creation of income trusts, under the pretext that the government wanted to limit the loss of tax revenues stemming from the conversion of corporations. In his economic and fiscal update in November 2005, the minister flip-flopped and lifted the moratorium that he had just declared in September 2005.

When the Conservatives said during the election campaign that they would not touch the financial vehicles known as income trusts, many investors found them to be a worthwhile investment. Big businesses and small investors all went ahead with them. The Conservatives must accept their considerable responsibility. Their actions caused the stock market activity that we saw in relation to income trusts.

But this tax avoidance had to be eliminated. When he was running for office, the current Minister of Finance should have been careful and said that he would look at the figures and announce appropriate measures once he was in power. Instead, he said that he would not make any change, but he reversed his position in the fall of 2006. Using a ways and means motion, he announced the introduction of a tax on the income distributed by trusts to companies, thereby going back on what he had said during the election campaign. This caused serious problems. However, if we take a close look at this issue, we see that the Conservative government practically had no choice. The finance department estimated that year in and year out, the different levels of government lost $400 million in revenue because of income trusts.

For example, Bell and Telus announced that they would convert to income trusts which, in and of itself, would have inflated tax losses to about $1 billion annually. This measure, which was allowing corporations to avoid paying significant amounts of tax, had to be eliminated.

The measure offered tax benefits, but no constructive benefit to the economy. The income trust structure practically forces a company to pay 100% of its profits to its shareholders at the end of the year, which is highly counter-productive in terms of economic investments. If the company keeps part of its profits for an investment project, for instance, it must pay the maximum amount of taxes on that non-distributed revenue. This structure did not promote investment. This is why, in addition to the tax leakage associated with the conversion of a growing number of income trusts for reasons that are strictly tax motivated, the potential loss of productivity in our businesses is a real danger when the manufacturing sector in Quebec and Canada is going through a serious productivity crisis.

For example, according to the World Competitiveness Yearbook, 2007, Canada was ranked seventh in 2005, but fell to 18th in 2006. Had the government not stepped in, a company such as Bell, for example, would have been forced to distribute all profits to its shareholders or be subject to substantial financial penalties. It makes no sense for this structure to be applied to a company such as Bell. Thus, Bell would have been forced to cancel its investments in order to ensure its growth and would have been condemned to die a slow death. Entire industrial sectors could have been forced, by shareholders wishing to maximize their short-term profits, to convert to income trusts merely for tax reasons. At the same time, they would have had to sacrifice long-term growth in our industrial sector. Action had to be taken to correct this situation. That is what the government did.

It was the way in which they did it that had a significant negative impact on the stock exchange and on the portfolios of small and large investors. First, it backtracked on its election promise made to citizens and investors that it would not change the tax treatment. After it came into power, it suddenly changed its mind.

The Bloc would have liked the Minister of Finance to have taken more care in making his decision. He could have arrived at a conclusion that would have avoided using this solution. The Bloc Québécois did make constructive suggestions in this regard.

Nevertheless, in the end, we have to come to terms with the government's position as expressed in the budget and the bill to implement the budget, which is currently before the Standing Committee on Finance. The Bloc Québécois does not believe that this budget corrects the fiscal imbalance. It merely corrects the financial imbalance without dealing with the underlying fiscal imbalance. All the same, we think that the budget deserves our support, and the people of Quebec agree with us on that. As part of its budget, the government will be transferring adequate funds to Quebec. In light of our current financial situation and the fact that often, the needs are provincial while the money is federal, that will give the province a chance to breathe.

They are correcting the situation for this year and the next few years, but they are not making any structural improvements. The federal government has yet to take that step. The Bloc Québécois has been fighting this battle for the past four years in the House of Commons and in every other forum imaginable. It has based its arguments on the Séguin report and the consensus in Quebec. Four years ago, nobody in this House was talking about fiscal imbalance. Now we have at least one budget that will allocate major funds to Quebec. As such, the budget deserves our support.

The income trust situation should have been fixed with a similar measure despite the fact that it clearly had a negative impact on a lot of investors. In terms of the underlying issue, the decision the government made was necessary, yet the government should have found other ways to ensure that the measure had as few negative effects as possible. Proposals to address this were submitted to the committee. The Bloc Québécois has been recognized for its efforts in that regard. The government did not agree to the Bloc's proposals. Instead, it implemented its own crude solution, which is fine, but our solution would have been better.

If the government had kept its original position and not made any changes, we would be faced today with huge flights of capital, which would add significantly to the challenges and problems facing the manufacturing industry in Quebec and Canada. We know how important it is in today's competitive global economy for capital to be available and used to improve productivity and not just make tax gains.

I believe that, on the face of it, the proposal my colleague is making today is not acceptable. This House must reject this motion. Moreover, if it were adopted, it would run counter to the budget that has been adopted and the implementation bill that is currently under study.

I invite my colleague and anyone who has questions about this issue that should be studied to continue making representations during the pre-budget consultations to come. This will not resolve the issue for this year, but if any additional information and solutions are out there, it would be interesting to know what they are. The Bloc Québécois began looking at income trusts in 2005, after the Liberal finance minister announced that the moratorium had been lifted. We did not want to abolish income trusts at that time. Instead of preventing corporations from becoming income trusts, we were in favour of introducing a minimum tax on profits from income trusts. We felt that this was worth considering, as it would rebalance the tax treatment of income trusts and corporations.

Following the minister's decision, in October 2006, the member for Joliette, who was then our party's finance critic, brought forward a motion before the Standing Committee on Finance that read as follows:

That, as soon as the report on prebudget consultations has been completed, the Standing Committee on Finance study the economic and fiscal consequences of the transformation of a growing number of taxable corporations into income trusts.

A few days later, we learned where the finance minister stood on this issue. Today, we have to choose between voting for this motion—which would recreate a very difficult situation that is not good for the economy and especially the manufacturing industry—and rejecting this motion. The Bloc Québécois chooses to reject the motion. We believe that that is better overall for Quebec's economy. We must move in that direction.

Mr. Speaker, there is a good reason why the United States, Great Britain, Japan, Australia, or any country in the European Union, such as Germany or France, do not allow income trusts. The United States does not allow them because they are disastrous economic policy, and I do not use the word “disastrous” lightly.

Income trusts are corporate greed gone wild. They are a corporate wet dream. No business likes to pay taxes, so these guys have discovered a way to pay none, not just lower taxes but no taxes. The guy who developed this got a promotion. Some young Turk somewhere on Bay Street or Wall Street got a bonus that year after inventing this. I cannot get over how we have allowed this disastrous policy to percolate and incubate until it has reached the magnitude that it has.

The NDP spoke out as soon as it noticed it. I took note when the Yellow Pages converted to an income trust. It was a good number of years ago. I met one of the lawyers who orchestrated the Yellow Pages conversion. He said to me, “You are a socialist”. He asked why we were not screaming bloody murder, that somebody should call the cops, that there was robbery going on. That was essentially his point of view. He asked how we could stay silent on it, did we not read the financial pages? In actual fact, sometimes I think we do not read the financial pages enough because stuff like goes on that deserves to be denounced in the strongest possible way.

Businesses do not like paying taxes, so they argue with government all the time that they should pay less and less. We balk sometimes at that, but they have managed to shift the tax burden successfully over the years. It used to be that roughly 50% of government's tax revenue came from individuals and the other 50% came from business. That has shifted dramatically to 80:20, to 85:15, to where individuals are assuming the overwhelming majority. With income trusts, businesses found a way to pay no taxes and shift all the burden on to the unit holder who would get the revenue.

A lot of people do not understand how simple the income trust concept is. Businesses are putting together a corporate structure where there are nothing more than shells, flow through entities. That is what is disastrous.

This was why our American colleagues, who know capitalism better than anyone in the world perhaps, balked at it. They recognized how devastating this would be for a business if the earnings simply flowed through to unit holders with no commitment to hang on to any of that money for research and development or to grow the business and hire more people.

The obligation is to meet this insatiable demand for increased revenue to the unit holders. They suck the life out of a corporation. They stuck it dry. It is corporate greed at its ugliest, at its worst embodiment. It is the manifestation of greed run wild for short term gain and long term pain. That is why no country in the world would allow it. That is what was wrong—

It went from a relatively obscure tax gimmick to $200 billion in capital holdings, an untold lost revenue for Canada in terms of taxation. As that money flows through the shell to the unit holders, the unit holders get taxed as individuals with earnings, but they may be taxed at an entirely different rate. Depending on their personal tax status, they may not pay any.

In actual fact, the lost opportunity has been staggering. It is corporate greed gone wild. The lost opportunity has been devastating. It has been irresponsible. It has been nothing short of stupid to allow it to continue to this point.

We should have spoken out louder. My colleague from Timmins—James Bay and I feel a bit sheepish for not speaking out more loudly the day we learned about this atrocious system. We should have stood up to Bay Street, when the Liberals would not, and said no, that in no uncertain terms would we be the only stupid country in the world allowing this ridiculous situation.

At the shareholders meeting where they voted on whether or not they should convert, one CEO, of an oil and gas company in Alberta that converted, told the shareholders that this would not be allowed forever. He said that he could not believe they were being allowed to do it now but that seeing that it is legal, he advised the shareholders to vote yea on it and convert to an income trust because it was too good to be true. Sure enough, they went ahead and did it and they succeeded.

For many companies it started to snowball. A domino effect took place until it was out of control. Now it is not a popular move. The Liberals have ganged up with the Bloc in trying to find a way to condemn the government for doing what it had to do. I am no big fan of the Conservative Party but this is our opinion too, that the income trust debacle had to be stopped. It had to put the breaks on it and it is irresponsible now to try to reverse that.

We have been following this. The Liberals' record on income trusts has been to do what they do best, which is absolutely nothing. They stood by and watched as this debacle grew.

Independent studies show that income trusts have been over-valued by as much as 40%. Therefore, there is a whole campaign of misinformation. They will eventually drop in value. More than 20% of the business trusts that have come on stream since 2001 are down 20% in value.

What people need to know is that two out of three business trusts are paying out more in dividend earnings to their unit holders than they are bringing in. Is that not a recipe for disaster? Does that pretty much sound the death knell for that particular business because it can only do that for so many years before it will be out of business? That is simply the way this is happening.

Corporations have openly admitted that their attraction to income trusts has been tax avoidance. That is not a very noble thing to guide itself by if a business' sole purpose for restructuring its entire company is that it does not pay its fair share of taxes in this country. Even though we have stripped down the tax rate for businesses in Canada, which are lower than in the United States now, businesses are still looking for ways for wholesale tax avoidance. I call them tax fugitives. I have no respect for people or businesses that do not want to pay their fair share of taxes in this country.

The concern over the resulting loss in tax revenue has been noted by both the federal and all provincial governments irrespective of their political stripe and it is irresponsible for somebody today to be arguing that we should reverse this decision. They have not consulted anybody but the wacko little bunch of activists who have put on the most lame and ineffectual lobbying campaign I have ever seen.

No, I am not talking strictly of him. I am talking about the income trust campaign, the income trust unit holders who are lobbying government. We all get the e-mails from them but they have no substance to their arguments. Their only argument is agreed. They want it all and they want it all now, and they do not give a damn what happens 10 years from now to the economy. It is a recipe for economic disaster. It is irresponsible. It is the role of government to step in and intervene when we are on such a disastrous course, when we are riding that bus over the cliff, as somebody said.

The NDP is committed to a dynamic economy. Witness after witness, including the Bank of Canada, supported the NDP's concerns that business income trusts were inappropriate business structures that can undermine the long term growth of a dynamic economic future for Canada.

We need to stay the course and do what is right and get back to a stable financial market and a stable investment culture and atmosphere without this unfortunate hiccup of income trusts.

Mr. Speaker, this afternoon in the House there was an exchange between the member for Ottawa South and myself and I want to speak to that this evening. I made some efforts to have the member in the House but, unfortunately, it is not so.

The exchange between he and I resulted in a call on his privileges. After that we both met the media outside where I admitted that I should not have crossed the floor to complain about his attack on me. Since I admitted it outside the House, it is only fair that I do so inside the House.

Within 10 minutes I will be presiding over the committee of the whole House and, before that happens, I need to clear the air.

I am sorry to have approached the hon. member for Ottawa South in that manner. As a father, I have often told my children that two wrongs do not make a right. If he wishes, I will still speak with him.

I would hope that all hon. members would respect the fact that as a chair occupant I steer clear of partisanship and that I stick strictly to the impartial running of the proceedings of the House. Since the event occurred, an hon. member from the official opposition has already commended me for that sort of behaviour and I had planned to continue in that way.

I thank the hon. member for Ottawa—Orléans for his statement. I will certainly take it into consideration. In light of what he said, I suspect I will not need to come back to the House but, if necessary, I will be back with a final ruling on the question of privilege raised earlier this day, but I believe that is likely to conclude the matter.

Mr. Speaker, I would like to thank the hon. member for Ottawa—Orléans for his intervention. He is an honourable gentleman and those of us who have worked with him certainly know he is sincere in what he has just said to the House.

Turning to the topic at hand, it has been six months since, out of the blue, the administration imposed a 31% tax on investors and caused their retirement savings to tumble. Some people ask why we, on this side of the House, keep fighting this move. Why do we tell average taxpayers not to give up? Obviously, we could and that would be the easy path but the easy path is not what we are choosing in this particular instance.

I will give five reasons why we think the income tax trust must be stopped, delayed or at least modified.

First, there, but for the grace of the Minister of Finance, go all the rest of us as taxpayers. If the Minister of Finance and the Prime Minister can impose a crushing new tax on personal investments and wipe away $25 billion in private savings and not care and get away with it, then it will probably happen again. One must ask what the next target will be of the finance department to minimize tax expenditures and to maximize revenues. Will it be to eliminate, to cap or start to tax RRSPs? Will it be to impose a capital gains tax, maybe even a modest one, on the massive real estate capital gains being enjoyed homeowners these days? Let us think about it. Without political accountability anything can happen.

Second, this is a simple betrayal. Many people invested in income trusts or increased their stake precisely because the Minister of Finance and the Prime Minister said that it was okay to do this. They said that they would never tax these investments. The man who is now Prime Minister said that over and again and his very words of course caused an increase in the flow of savings into these vehicles. His very words also encouraged many companies to convert into trust, secure in the knowledge, they thought, that a Conservative government could be counted on to keep its word. Now we know differently.

Third, this shows a profound and deep and troubling lack of respect. Such a draconian move by any government demonstrates that it does not care about individual security and, more worrisome for the government, it does not care about property rights.

The Prime Minister and the Minister of Finance knew well what this move would do to the pool of private savings in Canada: that the tax would depress the market value of all trusts and erase capital. However, they did it anyway. What is worse is that they knew a majority of these income trusts investors were seniors who had no pensions and so pension splitting is of no value to these people whatsoever. There is no offset and many of them are too old to recoup their losses. However, those guys did it anyway. A government that so disrespects seniors is not deserving of our respect.

Fourth, this really hurts the political system. The government was supposed to be different. It promised transparency and it promised consistency with no tricks, not getting elected saying that it would eliminate a tax and then not doing it, just steady Eddie government that we could all count on with a populace streak and a new respect for the common voter. That is what we were told but not so much. In a stroke that changed. It is now politics as usual: say one thing to gain support, get into power and do another, and that sucks.

It proves once again that politicians deserve to have the same standing as used car salesmen, which is what the latest survey shows.

Mr. Speaker, I rise on a point of order. I take offence to what the member just said. There are a number of people, and I am certain a number of people in his own riding, who work in the automotive industry and do not deserve to be drawn into disrespect by that member or any other member in the House in the manner that the member has just done. I would ask him to withdraw his comment.